Is it possible to pull out tens or hundreds of thousands of dollars from your home equity but not incur debt or be required to pay interest as you would with a reverse mortgage or home equity credit line?

Yes — provided you’re willing to cut investors into a share of the future growth in the market value of your home.

Two financial companies based in California (EquityKey and FirstREX) let you tap home equity now in exchange for giving them a portion of your home’s appreciation later, when you sell the place. There are no restrictions on how you use the funds when you get the cash.

Not For All Homeowners

But this sort of arrangement is not for everyone. It can take away large chunks of your future gains in home value, essentially limiting what you or your heirs will receive when you sell your home. And you might owe the company money if you unload the property within a few years of signing the agreement.

In short, shared-appreciation deals are probably best for owners with an immediate desire for cash who don’t plan to move anytime soon and believe local property values won’t soar in coming years.

Here’s how the general concept works:

Assuming you have at least 25% or more equity in your home and a good credit history, you may be eligible for a lump-sum cash payout — say $50,000 to $100,000 — depending on the value of your property. (EquityKey says it typically pays between 6 and 17% of a property’s appraised value.)

When you move out, if there’s been no appreciation or a severe depreciation in property values, you could owe the company little or nothing. If appreciation has been significant, you’ll need to share it.

Under some circumstances, if you sell the house within five to 10 years of signing the agreement, you might need to come up with some money even if there was zero appreciation.

How Much Money You’ll Give Up

The size of the eventual split under both the EquityKey and FirstREX plans is up to you and is spelled out in the agreement you sign upfront. It might be for as little as 20% of future appreciation or as much as 100%, depending on the company and the terms you agree on.

Bear in mind that what you’ll split is only the amount your home’s value has grown since you signed up; any equity you had before that is not on the line.

For a simplified example, say your home appreciates $200,000 between the time you sign the sharing agreement this year and the sale date in 15 years and you chose the 50% option. In this case, you’d owe $100,000 in appreciation-sharing to the investor in the deal, straight out of the sale proceeds.